News Release For Immediate Release Contact: Thomas Duryea, President and CEO, Summit State Bank (707) 568-4920 Summit State Bank Reports a 25% increase in Earnings for 2013 and Declaration of Dividend SANTA ROSA, CA (January 27, 2014) Summit State Bank (Nasdaq: SSBI) today reported net income for the year ended December 31, 2013 of $4,321,000, a 25% increase over 2012. Earnings per share increased to $0.85 in 2013 from $ in 2012. The quarterly dividend of $0.11 per share was declared payable on February 24 with a record date of February 18, 2014. Net Income and Results of Operations The bank had for the year ended December 31, 2013, net income of $4,321,000, net income available for common stockholders, which deducts the preferred dividends, of $4,068,000, and $0.85 diluted earnings per share, compared to net income of $3,448,000, net income available for common stockholders of $2,927,000, and $ diluted earnings per share, for the year ended December 31, 2012. For the quarter ended December 31, 2013, Summit had net income of $1,166,000, net income available for common stockholders of $1,132,000, and diluted earnings per share of $0.24 compared to $1,024,000 in net income, $941,000 net income available for common shareholders, or $0.20 diluted earnings per share, for the same period in 2012. We are pleased 2013 was our most successful year to date as our community banking team continued to grow earnings to a new high and further expand existing high quality customer relationships, said Tom Duryea, President and Chief Executive Officer. Net interest income was $16,566,000 for 2013, a 2.0% increase of $317,000 compared to 2012. The fourth quarter 2013 net interest income was $4,303,000, compared to $4,247,000 for the fourth quarter of 2012. The increase in net interest income was primarily attributable to higher levels of core relationship deposits and increase in earning assets. The net interest margin was 3.88% for 2013 compared to 4.12% for 2012. Return on average assets improved in 2013 to 0.98% from 0.84% in 2012 and return on average common equity was 8.33% for 2013 compared to 6.08% in 2012. The efficiency ratio continued at 60% for 2013 and 2012. One of the Bank s key strategies has been to improve our funding mix by increasing relationship transactional deposit accounts in order to improve and provide stable
funding costs. Core deposits, defined as demand, savings and money market deposits, increased $21,000,000 or 12% to $188,455,000 at December 31, 2013 with the increase concentrated in demand deposits which increased by $19,000,000 or 22% to $106,744,000 at December 31, 2013. Total assets increased to $454,074,000 at December 31, 2013 compared to $444,896,000 at December 31, 2012. Nonperforming assets at December 31, 2013 was $10,385,000 compared to nonperforming assets of $12,120,000 at September 30, 2013 and $9,685,000 at December 31, 2012. Nonperforming assets include $4,771,000 in foreclosed commercial properties that are producing income for the bank. Nonperforming loans to total loans was 1.95% at December 31, 2013 compared to 2.26% at September 30, 2013 and 1.72% at December 31, 2012. The provision for loan losses expense was $50,000 for 2013 compared to $3,360,000 in 2012. The allowance for loan losses to total loans declined to 1.88% at the end of 2013 compared to 2.04% at the end of 2012. We have been able to sharply scale back our loan loss provision expense as we prudently built the allowance for loan losses during the economic downturn and were able to resolve many problem loans without the use of the allocated reserves, said Bill Fogarty, SVP and Chief Credit Officer. The Bank s regulatory capital remains well above the required capital ratios with a Tier 1 capital leverage ratio of 13.2%, a Tier 1 risk-based capital ratio of 17.4% and a Total risk-based capital ratio of 18.6% at December 31, 2013. About Summit State Bank Summit State Bank has total assets of $454 million and total equity of $62 million at December 31, 2013. Headquartered in Sonoma County, the Bank provides diverse financial products and services throughout Sonoma, Napa, San Francisco, and Marin Counties. Summit has been recognized as one of the Top 75 Corporate Philanthropists in the Bay Area by the San Francisco Business Times. In addition, Summit State Bank received the 2013 Rising Star Award from the California Independent Bankers, the 2012 Community Bank Award from the American Bankers Association for its nonprofit work, and has been recognized as one of the North Bay s Best Places to Work by the North Bay Business Journal. Summit has also been consistently recognized as a high performing bank by Findley Reports. Summit State Bank s stock is traded on the Nasdaq Global Market under the symbol SSBI. Further information can be found at www.summitstatebank.com. Forward-looking Statements Except for historical information contained herein, the statements contained in this news release, are forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. This release may contain forwardlooking statements that are subject to risks and uncertainties. Such risks and uncertainties may include but are not necessarily limited to fluctuations in interest rates, inflation, government regulations and general economic conditions, and competition within the business areas in which the Bank will be conducting its operations, including the real estate market in California and other factors beyond the Bank s control. Such risks and uncertainties could cause results for subsequent interim periods or for the entire year to differ materially from those indicated. You should not place undue reliance on the forward-looking statements, which reflect management s view only as of the date hereof. The Bank undertakes no obligation to publicly revise these forwardlooking statements to reflect subsequent events or circumstances.
SUMMIT STATE BANK AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (In thousands, except for earnings per share data) Three Months Ended Twelve Months Ended December 31, 2013 December 31, 2012 December 31, 2013 December 31, 2012 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Interest income: Interest and fees on loans $ 3,603 $ 3,832 $ 14,201 $ 15,022 Interest on Federal funds sold - - - - Interest on investment securities and deposits in banks 928 824 3,539 3,234 Dividends on FHLB stock 37 14 101 22 Total interest income 4,568 4,670 17,841 18,278 Interest expense: Deposits 227 396 1,160 1,847 FHLB advances 38 27 115 182 Total interest expense 265 423 1,275 2,029 Net interest income before provision for loan losses 4,303 4,247 16,566 16,249 Provision for loan losses - - 50 3,360 Net interest income after provision for loan losses 4,303 4,247 16,516 12,889 Non-interest income: Service charges on deposit accounts 140 129 566 519 Rental income 130 122 516 499 Net securities gains (losses) 6 (23) 80 728 Net gain (loss) on other real estate owned 65 (69) 34 (89) Loan servicing, net 4 5 14 29 Building legal settlement - - - 1,363 Other income 117 112 458 449 Total non-interest income 462 276 1,668 3,498 Non-interest expense: Salaries and employee benefits 1,388 1,329 5,327 5,303 Occupancy and equipment 326 420 1,453 1,509 Other expenses 1,067 1,032 4,053 3,709 Total non-interest expense 2,781 2,781 10,833 10,521 Income before provision for income taxes 1,984 1,742 7,351 5,866 Provision for income taxes 818 718 3,030 2,418 Net income $ 1,166 $ 1,024 $ 4,321 $ 3,448 Less: preferred dividends 34 83 253 521 Net income available for common stockholders $ 1,132 $ 941 $ 4,068 $ 2,927 Basic earnings per common share $ 0.24 $ 0.20 $ 0.85 $ Diluted earnings per common share $ 0.24 $ 0.20 $ 0.85 $ Basic weighted average shares of common stock outstanding 4,777 4,745 4,761 4,745 Diluted weighted average shares of common stock outstanding 4,814 4,749 4,794 4,746
SUMMIT STATE BANK AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (In thousands except share and per share data) December 31, December 31, 2013 2012 (Unaudited) ASSETS Cash and due from banks $ 16,128 $ 19,979 Total cash and cash equivalents 16,128 19,979 Time deposits with banks 1,985 2,977 Investment securities: Held-to-maturity, at amortized cost 15,558 - Available-for-sale (at fair market value; amortized cost of $116,947 in 2013 and $123,026 in 2012) 113,568 125,714 Total investment securities 129,126 125,714 Loans, less allowance for loan losses of $5,412 in 2013 and $5,749 in 2012 282,667 275,877 Bank premises and equipment, net 5,505 5,160 Investment in Federal Home Loan Bank stock, at cost 2,578 2,265 Goodwill 4,119 4,119 Other Real Estate Owned 4,771 4,845 Accrued interest receivable and other assets 7,195 3,960 Total assets $ 454,074 $ 444,896 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - non interest-bearing $ 62,865 $ 58,548 Demand - interest-bearing 43,879 29,059 Savings 25,740 23,257 Money market 55,971 56,669 Time deposits, $100,000 and over 114,435 128,785 Other time deposits 38,378 44,686 Total deposits 341,268 341,004 Federal Home Loan Bank (FHLB) advances 48,500 40,000 Accrued interest payable and other liabilities 2,676 1,022 Total liabilities 392,444 382,026 Shareholders' equity Preferred stock, no par value; 20,000,000 shares authorized; shares issued and outstanding - 13,750 Series B in 2013 and 2012; per share redemption of $1,000 for total liquidation preference of $13,750 13,666 13,666 Common stock, no par value; shares authorized - 30,000,000 shares; issued and outstanding 4,777,670 in 2013 and 4,744,720 in 2012 36,608 36,396 Retained earnings 13,316 11,250 Accumulated other comprehensive income (loss) (1,960) 1,558 Total shareholders' equity 61,630 62,870 Total liabilities and shareholders' equity $ 454,074 $ 444,896
Earnings Summary (In Thousands) Three Months Ended Twelve Months Ended December 31, 2013 December 31, 2012 December 31, 2013 December 31, 2012 Statement of Income Data: (Unaudited) (Unaudited) (Unaudited) (Unaudited) Net interest income $ 4,303 $ 4,247 $ 16,566 $ 16,249 Provision for loan losses - - 50 3,360 Non-interest income 462 276 1,668 3,498 Non-interest expense 2,781 2,781 10,833 10,521 Provision for income taxes 818 718 3,030 2,418 Net income $ 1,166 $ 1,024 $ 4,321 $ 3,448 Less: preferred dividends 34 83 253 521 Net income available for common stockholders $ 1,132 $ 941 $ 4,068 $ 2,927 Selected per Common Share Data: Basic earnings per common share $ 0.24 $ 0.20 $ 0.85 $ Diluted earnings per common share $ 0.24 $ 0.20 $ 0.85 $ Dividend per share $ 0.11 $ 0.09 $ 0.42 $ 0.36 Book value per common share (2)(3) $ 10.04 $ 10.37 $ 10.04 $ 10.37 Selected Balance Sheet Data: Assets $ 454,074 $ 444,896 $ 454,074 $ 444,896 Loans, net 282,667 275,877 282,667 275,877 Deposits 341,268 341,004 341,268 341,004 Average assets 453,801 431,882 441,583 410,291 Average earning assets 437,822 415,690 426,819 393,941 Average shareholders' equity 61,937 62,851 62,480 61,812 Average common shareholders' equity 48,271 49,185 48,814 48,146 Nonperforming loans 5,614 4,839 5,614 4,839 Other real estate owned 4,771 4,845 4,771 4,845 Total nonperforming assets 10,385 9,684 10,385 9,684 Troubled debt restructures (accruing) 4,465 6,393 4,465 6,393 Selected Ratios: Return on average assets (1) 1.02% 0.94% 0.98% 0.84% Return on average common equity (1) 9.30% 7.61% 8.33% 6.08% Efficiency ratio (4)(5)(7) 59.25% 61.17% 59.78% 60.45% Net interest margin (1) 3.90% 4.06% 3.88% 4.12% Tier 1 leverage capital ratio 13.2% 13.4% 13.2% 13.4% Tier 1 risk-based capital ratio 17.4% 17.1% 17.4% 17.1% Total risk-based capital ratio 18.6% 18.4% 18.6% 18.4% Common dividend payout ratio (6) 46.47% 45.38% 49.19% 58.35% Average equity to average assets 13.65% 14.55% 14.15% 15.07% Nonperforming loans to total loans (2) 1.95% 1.72% 1.95% 1.72% Nonperforming assets to total assets (2) 2.29% 2.18% 2.29% 2.18% Allowance for loan losses to total loans (2) 1.88% 2.04% 1.88% 2.04% Allowance for loan losses to nonperforming loans (2) 96.40% 118.80% 96.40% 118.80% (1) Annualized (2) As of period end (3) Total shareholders' equity, less preferred stock, divided by total common shares outstanding (4) Noninterest expenses to net interest and noninterest income (5) Excludes net gains (losses) on securities and other real estate owned (6) Common dividends divided by net income available for common stockholders (7) Excludes building legal settlement in 2012